Question

What are the arguments for and against the imposition of mandatory retirement? Is this likely to be optimal from the point of view of the worker or the employer? What alternatives would you suggest?

Answer 1

If retirement age is made mandatory it will appear be to age discrimination.The idea of mandatory retirement is that workers dont stay with their employers for long especially at high wages.To avoid law suits of age discrimination against mandatory retirement, employers can make contractual agreement for a person in the age group of 30yrs to retire after 38 yrs.This contractual agreement of mandatory retirement will make openings for new employees and new ideas.If retirement age is specified, employers might even like to employ older employees taking into consideration the experience of such employees.However ,setting a mandatory retirement age will call for strong opposition as it will effect the senior citizens.It is believed that older persons do not allow businesses to choose the best person for the job.If retirement age is not made mandatory,the work force will improve and the employers will have the benefit of experience and skills of the work force. The burden on the pension system of ageing population will be less.It will improve the labour market supply.This will lead to older people participating in society.

Imposition of mandatory retirement is not optimal from the point of view of the employer and employee as well because there will be increase in welfare expenditure and burden on the pension system of the employer. The employees will be discriminated on age basis and lose their dignity and self reliance.

Mandatory retirement is inefficient and since our population is ageing ,no country can afford to lose skilled workers at a premature level. There will be lower outcome and so rate of participation of older workers should increase. So mandatory retirement should be abolished.As such inherent worth and dignity of workers of all ages will be recognised and this step will reduce welfare expenditure as well.